The Essays Of Warren Buffet
Warren Buffet
Summary
A collection of the best essays Warren Buffet has written his annual Berkshire report. He discusses his principles and how he's made decisions that have made him one of the most successful investors of all time.
Rating: 4/5
Notes
Select managers who are able, honest and hard-working
CEOs are given 3 commands: they are the sole owner, it its the only asset they hold and they can never sell or merge for 100 years
Stick to investment knitting: long term index fund or proper diligence
Concentrate your investments if you’re done your homework
- Put all your eggs in one basket and focus on that basket
‘Margin of safety’ - value investing doesn’t equally focused investing
Understand your circle of competence
Most acquisitions are value decreased but you need to evaluate the opportunity costs against buying smaller business w/ stock
A financial statement must answer how much a company is worth, is it likely to meet future obligations and how good are its managers in operating a business
Never announce earnings targets as a CEO and never trust a company that does so
Beware of companies displaying weak accounting and targeting EBITDA
Unintelligible footnotes indicate untrustworthy mgmt
For public boards, have less than 10 members and mostly independent
Board directors need to be business savvy, interested and shareholder oriented
The least independent directors are those receiving large fees from board services
‘Hire people bigger than you are so you become a team of giants’
Work w/ people you like to spend time with
'The intellect should be the servant of the heart, but not its slave.’
Good managerial record is more a function of what business boat you get into, rather than how effectively you row. If you have a chronically leaking boat, you need to jump ship rather than repair the leak
Fixed price options give owners of companies free capital
Purchase shares in good businesses when market prices are at a large discount from underlying business value
If you’ve been in the game for 30 minutes and you don’t know who the patsy is, you’re the patsy
In the short run the market is a voting machine, but in the long run it’s a weighing machine. As long as the company’s value is increasing intrinsically, the stock price is irrelevant
‘You shape your houses and then they shape you’ - Churchill
The market is frequently efficient but not always efficient. There’s a massive difference. Efficient market theory (EMT) is wrong
When evaluating a business to invest in:
- Evaluate the long term economic characteristics of the business
- Certainty with which management can be evaluated
- Mgmt giving to shareholders rather than themselves
- Purchase price of business
- Levels of taxation experienced in the future
Concentrate your holdings on business you know best
Assess the economics of each business, the quality of people running it and buy into a fear of the best operations at a good price
Look at per share operating earnings and compare to share price
Stick to businesses you understand and ones that have a margin of safety (where stock price needs to be substantially different than the value price)
Inactivity is intelligent behaviour
Search for operations that have enormous competitive strength 10-20 yrs from now. Don’t invest in ones with major changes
Evaluate companies within your circle of competence and know your boundaries
You must be willing to own the stock for 10 years and put together a portfolio where earnings march upward over the years
Don’t buy stocks at extremely low valuations - the cigar butt approach to investing
Do not take on unnecessary debt
Invest in productive assets rather than gold or bonds
Don’t trust zero coupon bonds
US dollar will weaken over time
House purchases should include 10% down and monthly payments comfortably handled by the home owner’s income
For investors as a whole, returns decreases as motion increases
If companies repurchase shares, you should be happy when the stock falls because you will own more of the company
When thinking about M&A, it pays to be interested, active and open-minded but not to be in a hurry
Go to where the puck is going to be, not where it is - Wayne Gretzky
Never pay that much attention to projections, focus on the core business
Intrinsic value: the discounted value of cash that can be taken out of a business during it’s remaining life but it’s always an estimate
An investor will realize a far greater sum from a single investment that compounds than from multiple investments due to fees and taxes
***
Buy the book here
Free E-book download here
How the World Works
Noam Chomsky
Summary
A combination of books Chomsky wrote in the 80s and 90s about America and it's role in the world. Fascinating read and insight into one of the great thinkers of the 21st century
Rating: 5/5
Notes
The US invaded Greece in 1947 and supported a horrendous war which led to 160k Greek deaths. This was the model for Vietnam and allowed American business to gain and thrive
US policies in the 3rd world consistently opposed democracies if they couldn’t be controlled as real democracies believe government should respond to the needs of their own population rather than those of US investors
US-run contra forces in the 3rd world isn’t ordering killing - it’s brutal sadistic torture (Nicaragua, El Salvador, Guatemala)
From the Bolshevik revolution in 1917 till the collapse of the communist governments in eastern europe in the 80s, it was possible to justify every US attack as defense against the Soviets
If you want a global system that’s subordinated to the needs of US investors, you can’t let pieces of it wander off. It’s clearly stated in the documents of record
The US wants ‘stability’ meaning security for the upper classes and large foreign businesses
Solid case for impeaching every American president since World War 2 either outright as war criminals or involved in serious war crimes
El Salvador and Nicaragua were not covered by the US media in the 70s when US-supported brutal torture and murder were taking place
In the early 80s, America’s friends slaughtered 10s of thousands of Guatemalans with countless others tortured and raped
After Vietnam, the major US policy goal has been to maximize repression and suffering of countries demonstrated by their violence - blocked other countries from seeking aid
The US regularly carries out or supports aggression
For most of the 20th century, the US was the dominant economic power and used economic warfare as a weapon ranging from illegal embargoes to enforcement of weak IMF rules with their military becoming pre-eminent
The US tries to avoid negotiations with countries as the US fears it will lose and other countries will be better off
When a state has huge debts, it must divert the population from what’s happening and they do this by inspiring fear of our enemies (Russia in Europe)
The real enemy of the US has always been ‘the poor who seek to plunder the rich’. In America, it’s the opposite and has been for generations
‘The war on drugs’ was a manufactured media blitz by the US leadership to distract the population, increase repression in inner cities and build support for attack on civil liberties
The US government blocks international effort to seek peace (Russia and Ukraine)
Major media are large companies owned and interlinked with even larger conglomerates. The market is the advertisers and the product is audiences
The power in the US lies in the hands of people who determine investment decisions as they determine production, distribution and staff the government. They want a passive, quiescent population
The struggle of freedom is never over and requires active and sustained efforts
One important consequence of globalization is it extends the third world model to industrial nations where the average person has their jobs shipped away while the rich and elite continue to amass massive amounts of wealth
We’ve moved to an international state with the IMF, World Bank, G7 & EU, WEF where the general population doesn’t know what’s happening and it doesn’t know it doesn’t know
If the borrowing the US has done was used for constructive purposes like investment or infrastructure, the US would be better off, but it was used to enrich the rich - for consumption, financial manipulation and speculation which are all harmful
The class warfare of the last few decades has successfully weakened popular organizations leaving people to feel isolated
The US is so deeply in debt to the international financial community because of debt that they have a lock on US policy
Many of the large number of security council resolutions vetoed by the US have to do with Israeli aggression or atrocities
Invaders typically use local collaborators to run things for them by playing upon existing rivalries to get onne group to work for them against another
European wars were wars of extermination. If we were to be honest about history, we would simply describe it as barbarian invasion
There has always been racism but it developed as a leading principle of thought in the context of colonialism.
A standard technique of belief formation goes along with oppression
In the US, you’re not allowed to talk about the class differences, which is the real issue
When the US establishment talks about jobs, it means profits for its corporations
The elite are masters and they follow what Adam Smith said about ‘the vile maxim’ - all for ourselves and nothing for anyone else
People who aren’t owners and investors have nothing much to say in the US
Jefferson warned against banking institutions and corporations and said if they grow, aristocrats would’ve won and the revolution would’ve been lost
The ‘Free market’ is for the poor. We have a dual system - protection for the rich and market discipline for everyone else
There’s been a considerable increase in inequality and has the American society moving towards a third world model, thereby seeing increased crime and signs of social disintegration
A huge area of the media is dedicated to diverting people and making them more stupid and passive
There’s nothing individualistic about corporations who are totalitarian in nature
Free trade agreements result in reduced wages for local employees while predominantly benefiting the rich consumer while also destroying unions
Operation Paper Clip imported large number of known Nazi criminals
The American army’s counter-insurgency literature begins with an analysis of the German experience in Europe written with the co-operation of Naxi officials (instruments of statecraft - book)
US involvement in Chile with the coup in 1973 to reduce social democracy
The threat of a good empire is what the US worried about with reforms on uncontrolled capitalism
The US killed a few million people and destoryed 3 countries during the Vietnam war
A huge amount of business propaganda is to create wants
The answers to solve all these issues is to organize. Being alone you can’t do anything but if you join with other people, you can make changes
Under capitalism, investment is supposed to be as risk free as possible. No competition wants free markets - what they want is power
The government subsidizes corporations’ costs, protects them from market risks and lets them keep the profits
There’s never been much difference between the 2 business parties and the differences are disappearing
The CIA has been involved in drug running for generations (the politics of heroin book)
You need something to frighten people with, to prevent them from paying attention to what’s really happening to them. You have to engender fear and hatred
The first world lives in a highly indoctrinated society
Neoliberalism is nothing more than the imperial formula: free markets for you and plenty of protection for me. The rich would never accept it but they’re happy to impose it on the poor
The UN does mostly what US business wants
‘Politics is the shadow cast on society by big business’ - John Devery
If people dedicate themselves to organizing and activism, we’ll gain access to broader audiences
If you extrapolate to the future, it’s very ugly but the point is it’s not inevitable. It can be changed but we can’t change things till we understand them.
***
Buy the book here
Free E-book download here
